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Tuesday, October 27, 2009

The real results of taxing a business

The recent article "BEHIND NEW YORK'S SMALL-BUSINESS DROP" shows the reality behind taxing business. New York's democratic mayor increased fees and property taxes on nearly everyone and the end results is many business are shutting down. Some are trying to sell out and move. The old adage "whatever you tax you get less of it" still applys. Tax small business, especially in a recession, and they have no way to make up the difference. They can't raise prices because nobody will buy. They can't lay off people because then the work cannot get done. If they do lay off people then the quality of work will suffer. So it is easier to just shut the doors and quit and get in the soup kitchen line like everybody else.

When a business closes then the property value drops, rent space goes vacant. The property owner has less income and the city get less tax money. Property values drop and the city get less money. The business is no longer selling anything so there is less sales tax collected and the city get less money again. An intelligent person would think that if taxing businesses becomes a losing endevor then maybe the city should stop and try something else. If tax increases decreases small businesses then maybe you should try a tax cut and see what happens. Duh!

I stated in a previous post that a tax cut can actually increase government revenues. Maybe its time for New York to do a reality check and quit doing what doesn't work.


See the article at:

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